The rapid rise of growth stocks and their ability to generate significant returns for portfolios is not always predictable. This situation precisely illustrates that, at certain times, taking a risk on promising companies may be worthwhile, even if their eventual success is not guaranteed. Assuming a certain level of risk can potentially lead to substantial gains in the long run.
Over the past two decades, NVIDIA (NVDA) and Netflix (NFLX) have created significant wealth effects for long-term investors. If an investment of $5,000 had been made in each of these companies twenty years ago, the current value would be astonishing. Among them, NVIDIA’s performance has been particularly outstanding. This chipmaker has experienced explosive growth in recent years, especially amid the rise of artificial intelligence. If $5,000 had been invested in its stock at the beginning of December 2005, its value would have surged to approximately $3 million today. The company has grown into one of the world’s leading enterprises by market capitalization, reaching about $4.5 trillion. Its business has fundamentally transformed, evolving from its early focus on graphics cards to now producing critical chips that power AI models. Over the past four quarters, NVIDIA generated $187 billion in revenue, a remarkable growth compared to its annual revenue of less than $30 billion just a few years ago. For investors focused on the AI sector, it is considered a relatively stable option that may be worth holding for the long term.
Another stock that has delivered massive returns is the streaming service provider Netflix. An investment of $5,000 made twenty years ago would now be worth approximately $1.2 million. Its development path has been relatively smoother, though not without challenges, and the company has established a leading position in the video streaming industry. Netflix continues to pursue growth, as evidenced by its recent attempt to acquire Warner Bros. Discovery for $72 billion. Although the deal may not materialize due to a takeover bid for Paramount SkyDance and concerns about potential impacts on market competition, it reflects the company’s proactive strategy of seeking expansion and enhancing value for users. The company has transitioned from losses to profitability, now achieving a profit margin of 24%. It has become a widely recognized consumer brand and is regarded as another growth stock with long-term holding value.
